The Basics of Socialism for the GED Social Studies Test

You should know a few things about socialism for the GED Social Studies test. Socialism falls between the two extremes of laissez-faire capitalism and communism, and it’s practiced in several different forms. Some countries, including Sweden and Norway, combine private ownership of commercial enterprises with publicly owned corporations.

Some socialist states have a highly regulated economy combined with high income taxes. Others, including Canada and Italy, may not consider themselves as socialist; they have less emphasis on public ownership but still provide many government services, ranging from free healthcare to free education and subsidized housing, paid for by taxes.

However, socialist countries offer all the democratic benefits of free speech, free association, and other freedoms to all their citizens. The confusion between socialism and communism comes from the fact that many communist countries refer to themselves as socialist republics. In fact, communist countries are generally police states with few democratic rights.

Norway combines state and private enterprise with free education through graduate school and a free public healthcare system, all supported by high taxes. The wealthiest pay an income tax of 50 percent in addition to a wealth tax on all their assets. To avoid tax cheating, the government posts all tax returns on a publicly accessible website.

As a result, the richest 20 percent in Norway own only 3.9 times the assets of the bottom 20 percent. (By comparison, that figure is 8.5 times for the wealthiest 20 percent in the United States.)

Canada’s economic model is closer to that of the United States. Taxes are relatively low, but the government provides social services including subsidized housing and free medical care for all. Regulations are similar to those of the United States, from health and safety laws to environmental protection, while other areas such as banking are more heavily regulated.

The federal government and provinces also own state enterprises known as Crown corporations. (In theory, they’re owned by the Crown in the name of the people.) Air Canada started as a Crown corporation when a passenger airline was needed and no private enterprise was forthcoming. The Canadian Broadcasting Corporation (CBC) is still government owned, providing radio and television services across the country right up to the arctic.

The provinces also own and operate electrical power corporations, and in one province, public automobile insurance. Provincially, alcohol sales are a government monopoly; all sales are through provincial Crown corporations. In Ontario, that Crown corporation earns the provincial treasury over a billion dollars a year.

Could the United States be considered a socialist country?

(A) yes

(B) no

(C) to a limited extent

(D) not enough information in the passage

Based on the text, the best answer is Choice (A). Though the United States government doesn’t generally own and operate businesses that compete with the private sector, it does own many corporations that benefit the public. These include various credit and banking companies, the Corporation for Public Broadcasting, and the Tennessee Valley Authority. The government does, however, regulate commerce and trade, set minimum wages, and provide various social services. That exceeds the idea of “limited extent” in Choice (C).